Private sector weather forecaster Skymet Weather Services plans to launch weather derivative indices on commodity exchanges like the MCX and NCDEX as and when approvals are received, a top company official said. "Our chief scientific officer Samal Basant is heading the modelling part of the weather derivatives index products. He has worked with the IITM as well as C-DAC earlier," Skymet chief of instrumentation Yogesh Patil said on the sidelines of an event organised by the company here over the weekend. Incidentally, in 2011, Omnivore Capital, whose anchor investor is Godrej Agrovet, had picked up 33% interest in the private sector weather forecaster Skymet for a consideration of Rs 4.5 crore. The rest of Skymet is owned by a former Aaj Tak journalist Jatin Singh, who is also its founder along with his father B K Singh, who was a vendor-contractor to the Pune-based Indian Meteorological Department. The India Today Group news channel Aaj Tak also happens to be one of the clients of Skymet along with other leading media houses like Reuters Market Light, Times Now, Dainik Jagran, Telegraph, Mint, Hindustan Times, Sakshi TV, Zee News and Zee TV. Skyment has four statisticians and two weather forecasting modellers who are part of its weather derivatives Indices design team, based in its Noida office, where it has its computing facilities, he said. "Our eventual goal is to tie up with an institution like Goldman Sachs to launch weather forecasting derivatives. Otherwise it will not take off. The domestic commodity exchanges like MCX and NCDEX have also evinced interest," Patil said. He further said the company will be applying for permission to all commodity exchanges, including companies like Indian Energy Exchange and PTC India.
Work on these products should be over by next year. The development comes despite the fact the Forward Contract (Regulation) Act Amendment Bill, which will enable introduction new products like weather derivatives, has been stuck in Parliament for the past 13 years. This February, Assocham president RN Dhoot had written to Prime Minister Manmohan Singh pointing out that the implementation of the Forward Contracts (Regulation) Amendment (FCRA) Bill 2010 would strengthen commodity market regulator. "The new FCRA Bill will enable the regulator to coordinate globally under mandate of G-20 and will also enable the market to introduce new and innovative hedging products like options and weather derivatives which can be tailored to the risk appetite of farmers to hedge risks," Dhoot said in his letter to the Prime Minister. However, on May 1 this year, Union Food & Consumer Affairs minister K V Thomas had said the proposed amendment Bill was unlikely to be passed in the current Parliament session. The company also provides data to power companies like Reliance Energy, CESC Kolkata, Torrent Power and North Delhi Power. "We provide weather forecast for the next 48 hrs to Reliance Energy. This enables them to predict demand for electricity at particular times. For example, when the temperature reaches a certain point, using past data, they can predict what will be the power consumption in the city at that temperature. This also enables them to do energy hedging," the official said.